Business conditions of the non-oil private sector in the UAE has improved in May, marking three-month high, a recent survey sponsored by Emirates NBD and produced by IHS Markit revealed on Monday.
The headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index (PMI) rose to 59.4 in May from 57.6 in April, which is one of the best readings since October 2014, according to the survey. A reading above 50 indicates expansion, while a reading below that signals contraction.
Khatija Haque, head of MENA Research at Emirates NBD, said: “While the rise in the headline PMI indicates faster GDP growth in the UAE’s non-oil private sector, the environment remains a challenging one for businesses.”
The UAE’s non-oil private sector business activity has seen steady growth in May as the rate of expansion accelerated sharply as compared with April, the survey indicated.
This growth was mainly driven by robust market demand, marketing activity, and new projects and most firms expect growth to carry on over 2020.
Moreover, the growth rate in new business in the non-oil private sector accelerated “at a near-record pace”.
Companies reported that “price discounting helped them to secure new orders”, the survey added, pointing out that new export orders increased rapidly in the past ten-year survey history, with the inclusion of new business from Saudi Arabia and Oman.
Overall input prices increased marginally last May at the slowest pace in nine months, the survey found out.
“The strong rise in both output and new orders last month was on the back of continued price discounting by firms as well as stronger growth in export orders. Moreover, when the headline PMI was last at a similar level (in October 2014 and January 2015) the survey showed solid growth in private sector jobs, which is not the case this time,” Haque highlighted.
Employment remained flat in May as non-oil firms were reluctant to hire additional staff, according to the survey.
“The employment index in May 2019 was only fractionally above the ‘no-change’ level and wages were stagnant as well, so the sharp rise in the volume of business activity is not yet benefitting households,” Haque noted.